ad fraud

How AI Is Addressing the Fraud in Advertising: Here's What You Need to Know

According to Forrester, 20 percent of marketers' budgets is being wasted on fake traffic.
How AI Is Addressing the Fraud in Advertising: Here's What You Need to Know
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Given the online advertising boom in today's digital age, businesses need to learn to allocate their marketing dollars wisely. Unfortunately, there's a big challenge to meeting that goal: Advertising fraud and lackluster results are rife in the digital ad space.

Related: Telltale Signs You Have an Ad Fraud Problem

As a business owner, digital manager and entrepreneur, you've likely already experienced these issues, via paid Instagram ads that failed to achieve their intended results, or paid services like Google Adwords that had no conversions. To avoid such outcomes, you need to make sure your ads stand out and that you're spending your dollars on actual results -- not bot traffic.

To clarify my Instagram example: Let's say that you paid Instagram to promote your post, and, all of a sudden, you start gaining a bunch of followers who, according to their account information, live in India and have only about five pictures each on their individual profiles.

I'm no ad-fraud detective, but judging from the looks of that kind of new traffic, you'd be wise to question these followers' validity. While Instagram gains a benefit by earning your ad money, you need clicks from people likely to buy your product -- not "followers" from some faraway land with profiles that appear fake.

Those people won't benefit you as a business owner. 

This is why you need to make sure you're on top of your ads, because they're big money these days: Nearly $170 billion was spent on digital advertising in 2015, according to the statistic portal Statista. By 2021, Statistic has predicted, this figure can will rise to more than $330 billion.

The problem is, digital advertising is a constantly changing game. And organizations are struggling to respond effectively. To adapt to the many changes happening, many companies are planning to increase their investments in advertising technology. They’ll be focusing on solutions that are more result-driven and customer-centric. Here's what you need to know:

What artificial intelligence can do.

Part of the newest wave of advertising tech utilizes artificial intelligence (AI). Advertisers are focusing their efforts on AI to provide potential customers with a personalized experience tailored to their wants and needs. AI can help advertisers avoid pushing irrelevant messaging and instead use consumer data to create customized campaigns that are relevant and engaging.

Related: You Should Be Protecting Your Business from Phony Leads

That's all very well. But, as Jon Gillham, founder and CEO of Adbank, recently told Crypto Analyst, “Over 50 percent of online traffic are bots.

"An unknown percentage of digital advertising dollars are wasted on fraudulent traffic and sites," continued Gillham , whose online advertising platform has developed patent-pending blockchain technology for fraud detection.

Specifically, more and more advertising companies are inflating their results with ad clicks from computer-based bots, instead of real potential consumers. These companies use bot traffic to exaggerate their data and inflate prices for customers. 

Similarly, many websites use those bots and inflate their traffic figures to entice potential advertisers to place ads with them.

That's the website situation. Mobile advertising fraud, meanwhile, has also become commonplace, so much so that many companies expect a certain level of it, according to a new report by Forrester Consulting. Forrester surveyed 250 marketers whose companies spend at least $1 million a month on digital advertising. And, the result, Forrester reported, was that 69 percent of the marketers said that at least 20 percent of their budgets was being eaten up by fraud on the mobile web.

In other words, 20 percent of their budgets was being wasted on fake traffic. 

Despite this problematic landscape, 70 percent of the marketers in the survey said they were actually increasing their budgets for mobile advertising over the next 12 months. That's a problem because, as 43 percent of the marketers said, the amount of fraud they had been subjected to had increased over the previous 12 months.

At the same time, only 19 percent as of the date of the survey had implemented systematic fraud prevention programs, and that figure was expected to increase in 2018.

So, the overriding question was whether these prevention programs would be enough: Fully 92 percent of the marketers reported that combating mobile fraud would be a high or critical priority of their companies for the next 12 months, in 2018. 

The problem is, ad fraud is only worsening. 

Forrester wasn't alone in its doom-and-gloom forecast. A recent report from the digital market research firm Juniper, predicted that advertisers would lose an estimated $19 billion to fraudulent activities in 2018. 

The Juniper report, Future Digital Advertising -- AI, Ad Fraud & Ad Blocking, 2017-2022, said that that $19 billion worked out to $51 million per day and  could  be expected to rise, reaching $44 billion by 2022.

The report also specified that advertising fraud would increase due to the lack of transparency between advertisers and publishers. The big problem, Juniper said, is that publishers aren't providing campaign result reports, due to the fact that they don't possess the right tools for these reports. Without more transparency, Juniper warned, successfully tackling fraud will be difficult to accomplish.

Still, there are solutions.

Despite the gloomy nature of its report, Juniper did identify some solutions to ad fraud -- like AI. By using AI to analyze data generated from advertising activities, Juniper said, advertisers could minimize financial losses. 

Of course, that in turn would demand innovation and the development of new strategies to fight fraudsters, simply because they'll just adapt their methods and find different ways to imitate genuine advertising activity. This activity, typically carried out by bots, includes simulated clicks, mouse movements and the creation of fake social network accounts that engage (via likes and comments.).

Juniper’s research indicated that platforms utilizing AI to target specific markets would account for 74 percent of total online and mobile advertising expenditures by 2022. 

With AI-powered technology and innovations now focusing in on advertising fraud, some studies predict that that fraud may become less rampant in coming years. According to a report on ZDNet from the security company White Ops, companies lost $6.5 billion due to ad fraud in 2017. That’s a decrease of 10 percent from the estimated $7.2 billion fraud took from companies in 2016.

These results are probably due to the increased awareness about deceptive advertising practices and the efforts companies are taking to address them, using AI and other technological advancements. With increased information, companies will know where and how their advertising dollars are being spent and be more likely to attain the results they want.

Related: 4 Ways Advertising Agencies Can Protect Themselves From Click Fraud

Then, hopefully, your company will gain new Instagram followers from Milwaukee, versus Mumbai. 

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